The mechanisms involved in monocyte activation and interactions that take place between monocytes and lymphocytes have been examined. Peripheral blood monocytes become cytotoxic after cocultivation in vitro with autologous unstimulated "helper" lymphocytes or with a soluble factor secreted by these helper cells. These monocytes are also controlled by suppressor lymphocytes. The relationship between loss of suppressor activity and the generation of helper activity is being investigated. The exact biochemical signals that trigger monocyte activation are not known at this time, however, many activating substances have been described, e.g., muramyl dipeptide, macrophage activating factor, that stimulate cytotoxic activity of monocytes. These activating factors can be packaged into multilamellar liposomes and these liposomes are phagocytized by monocytes. The factor(s) are then released intracellularly and render the monocyte cytotoxic. Therefore an internal signal rather than a surface binding stimulus is probably crucial in mediating activation. In addition, encapsulated MAF is more efficient than the free unencapsulated form. The use of liposome-encapsulated substances can be a powerful tool to deliver different agents into the monocyte in an attempt to study the biochemical signals that are important in activation.